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General Accounting Discussions: Consolidation

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    • CommentAuthorJong
    • CommentTimeJul 10th 2007
     
    I need help on this:

    This is a case of business combination - Company A acquired Company B, by purchasing the net asset of Comapany B. On the book of Comapany A (the acquiring company), the transaction is recorded at cost i.e. Dr Investment in Company B and Cr Cash. What will be the entries on the book of the acuqired Comapany B?

    Thanks
    Thankful People: fbenharash
    • CommentAuthoradaclarke
    • CommentTimeJul 17th 2007
     
    Well it all depends. If this is a consolidation with the purchased company being desolved, the company is sold why would they need an entry, but if it was one it may look like this:
    DR Cash
    DR Liabilities
    CR Assets

    If there is no dissolution than the subsidiary will continue recording transactions as if nothing happened. Its the parent (purchasor) company that will prepare a work sheet and consolidating entries.

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